Discover Merchant Settlement: Up to $1.225 Billion for Businesses by May 18, 2026

If your business accepted Discover credit cards at any point between January 1, 2007, and December 31, 2023, you may be entitled to a payment from a class action settlement valued at up to $1.225 billion — the largest open settlement of May 2026 by total fund size. The deadline to submit your claim is May 18, 2026, and most eligible merchants will receive a minimum base payment of at least $10, with no proof of individual transactions required.

The lawsuits alleged that Discover Financial Services, DFS Services LLC, and Discover Bank misclassified certain Discover-issued consumer credit cards as commercial credit cards over a 17-year period — placing those transactions in Discover's highest interchange fee tier and forcing merchants and payment intermediaries to pay excessive fees. Discover denies wrongdoing but agreed to settle. The U.S. District Court for the Northern District of Illinois granted preliminary approval on July 30, 2025, and the final approval hearing is scheduled for May 20, 2026.

Who Qualifies for the Discover Merchant Settlement

This is a business-side settlement. Individual consumers — Discover cardholders — are not eligible class members. The class is limited to three categories of business participants in the payment processing chain:

End merchants — businesses that accepted Discover card payments from customers and paid interchange fees as part of the transaction. This includes brick-and-mortar retailers, restaurants, online sellers, service providers, and any other merchant that processed at least one Discover transaction during the class period.

Merchant acquirers — financial institutions and processors that contracted with merchants to handle card transactions and remitted interchange fees to Discover.

Payment intermediaries — third-party processors and platforms (such as PayPal, Stripe, Square, Shopify, and similar services) that facilitated Discover transactions on behalf of end merchants.

Eligibility requires that the entity processed or accepted at least one misclassified Discover card transaction between January 1, 2007, and December 31, 2023. Subject to certain exclusions, all three categories may file claims for compensation under the settlement.

What You Can Receive

The settlement structure provides for a minimum guaranteed payout of $540 million distributed to the class, with a ceiling of $1.225 billion plus interest. The payment to each class member is calculated using two layers.

Base payment — every eligible class member receives a minimum of $10. If total base payments would exceed a $50 million aggregate cap, base payments are reduced on a pro-rata basis. Conversely, if total base payments are below $540 million, payments are scaled up pro rata until they reach $540 million.

Volume-based payment — larger merchants receive proportionally larger payments based on documented Discover card transaction volume during the class period. The settlement administrator calculates each entity's share using a variety of factors, including the total estimated interchange fee overcharge for each Discover Merchant Identifier (MID) associated with the entity, how interchange charges for each MID were allocated, and the total aggregate dollar amount across all settlement payments.

The minimum base payment is automatic for class members who file a valid claim, with no proof of transactions required. Larger merchants seeking volume-based payments may need to submit additional information by the May 18, 2026, deadline.

Why This Settlement Exists: The Misclassification at the Center of the Case

Credit card networks classify cards into different tiers, and each tier carries a different interchange fee — the fee merchants pay to the issuing bank for each transaction. Commercial credit cards (issued to businesses for business expenses) typically carry significantly higher interchange fees than consumer credit cards.

According to court documents, beginning in 2007, Discover misclassified certain consumer credit cards in its system as commercial credit cards. As a result, merchants who accepted those cards paid the higher commercial interchange rate instead of the lower consumer rate. The misclassification continued for approximately 17 years before being identified.

Federal regulators concluded that merchants were overcharged more than $1 billion between 2007 and 2023 due to the misclassification. The class action consolidated multiple lawsuits filed by merchants, merchant acquirers, and payment intermediaries seeking refunds for the excess interchange fees. Discover has not admitted wrongdoing, but the size of the settlement — between $540 million and $1.225 billion plus interest — reflects the scope of the alleged overcharges.

Key Deadlines

How to File Your Claim

The official settlement website is DiscoverMerchantSettlement.com. The claim filing portal is now open and remains open through May 18, 2026.

To file online, go to the settlement website and click the option to register or submit a claim. You will need the Claimant ID and PIN from your notice, which was mailed or emailed to known class members beginning September 11, 2025. Enter your information and follow the prompts to complete the claim form.

If you did not receive a notice but you believe your business processed Discover transactions during the class period, contact the settlement administrator at 1-888-655-3176 or through the settlement website's contact page to request a Claimant ID and PIN.

Most businesses fall into the category of "indirect end merchants" — merchants who accepted Discover cards through a payment processor or platform rather than directly through Discover. Indirect end merchants must file a claim by May 18, 2026, to be eligible for payment.

What If You Used a Payment Processor Like PayPal, Stripe, or Square?

Many small businesses do not have a direct relationship with Discover for card processing. Instead, they use a payment intermediary — PayPal, Stripe, Square, Shopify Payments, or a similar service. These intermediaries are themselves class members under the settlement structure.

If your business accepted Discover cards through one of these intermediaries during the class period, you may still qualify as an end merchant for purposes of the settlement. The settlement administrator's instructions and the official notice explain how end merchants who used intermediaries should structure their claims.

Class members are not required to sign up with any third-party recovery service to participate. You can file directly with the class administrator at no cost.

Frequently Asked Questions

I'm a Discover cardholder. Can I file a claim?

No. This settlement is for businesses (end merchants), merchant acquirers, and payment intermediaries that processed Discover transactions during the class period — not for individual consumers who used Discover cards.

How much will my business receive?

The minimum payment is $10. Larger merchants will receive larger payments based on transaction volume — calculated from the estimated interchange fee overcharge for each of your Discover Merchant Identifiers (MIDs). The exact amount depends on your processing history and the total volume of all valid claims.

Do I need to submit transaction records to file?

No. The minimum $10 base payment requires no proof of individual transactions. To qualify for a larger volume-based payment, however, the settlement administrator may use the records associated with your Discover MIDs — and you may need to submit additional information by the deadline.

What is a Discover Merchant Identifier (MID)?

A Discover MID is a unique identifier assigned to each merchant or location for processing Discover transactions. Most businesses have one MID; multi-location businesses or businesses using multiple processors may have several. The settlement uses MIDs to calculate the volume of qualifying transactions and the related interchange fee overcharges for each class member.

I had a small business that closed during the class period. Am I still eligible?

Yes, if your business accepted Discover transactions during the class period (January 1, 2007 to December 31, 2023). Filing requires the business records or successor documentation. Contact the settlement administrator if you need help determining whether your closed business has a claim.

I used Square for years — is Square going to file for me?

Square and other payment intermediaries are themselves class members under the settlement. Whether they file individually or pass through claims to the merchants they served depends on their internal practices. As an end merchant, you have an independent right to file a claim. Do not assume your processor will file on your behalf.

How long until I receive payment?

Payments are expected approximately 240 days after final approval — likely early 2027 — assuming no appeals. The final approval hearing is scheduled for May 20, 2026.

Are there other open class action settlements for merchants?

Yes. The Visa/Mastercard payment card interchange fee class action settlement (the Payment Card Interchange Fee, or PCIF, settlement) is a separate, ongoing settlement that has been making partial distributions. First payments from an earlier partial distribution in that case are expected to begin in February 2026. If your business accepted Visa or Mastercard during the relevant period, you may be eligible for both settlements.

What if I miss the May 18 deadline?

You forfeit your right to a settlement payment. Class members who did not opt out by March 25, 2026, are bound by the settlement and release their right to sue Discover individually for the same alleged misclassification.

Where can I get more information?

The official settlement website is DiscoverMerchantSettlement.com. The settlement administrator can be reached at 1-888-655-3176.

Disclaimer

This content is for general informational purposes only, is not legal advice, and does not create an attorney-client relationship. Joy Coleman is licensed in Georgia and New Jersey and is not licensed to practice law in Illinois, where the case is pending, or in any other state. Readers should consult a qualified attorney licensed in their jurisdiction.

If your business has been harmed by inflated payment processing fees or you have questions about your rights in a commercial class action settlement, search for a civil litigation attorney on AttorneyReview.com to connect with qualified legal counsel in your area.

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